If I Could Rewrite My Institution’s Purchasing Policies Here’s What They’d Be

1. If I Could Rewrite My Institution’s Purchasing Policies Here’s What They’d Be

2. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Me Alex Brown 2

3. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be • Background – OU’s Authority within Oklahoma • Organization – Current Policy • Organization – Proposed Policy • Why? • Current Practices • Best Practices • Significant Changes • Side-by-Side Comparison • Cross-Referenced Spreadsheet 3

4. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Background – OU’s Authority within Oklahoma Oklahoma Constitution Section XIII-8 Board of Regents of University of Oklahoma The government of the University of Oklahoma shall be vested in a Board of Regents consisting of seven members to be appointed by the Governor by and with the advice and consent of the Senate. The term of said members shall be for seven years, except and provided that the appointed members of the Board of Regents in office at the time of the adoption of this amendment as now provided by law shall continue in office during the term for which they were appointed, and thereafter as provided herein. Appointments for filling vacancies occurring on said Board shall be made by the Governor with advice and consent of the Senate and said appoints to fill vacancies shall be for the residue of the term only. Members of the Board of Regents of the University of Oklahoma shall be subject to removal from office only as provided by law for the removal of elective officers not liable to impeachment. Added by State Question No. 311, Referendum Petition No. 88, adopted at election held on July 11, 1944. 4

5. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Organization – Current Policies 4.11 Buying And Selling Goods And Services 4.11.1 Policy 4.11.2 Buying Goods and Services 4.11.3 Purchases That Must Be Processed Through The Purchasing Department 4.11.4 Purchases That Are Not Required To Be Processed Through The Purchasing Department 4.11.5 Purchases The Require The Assistance And Review Of The Purchasing Department 4.11.6 Purchases From Auxiliary Enterprises And Service Units 4.11.7 Submitting Purchases To The Board Of Regents For Approval And Reporting Other Purchases 4.11.8 Sole Source Purchases 4.11.9 Property Control And Capitalization Of Certain Purchases, Gifts or Other Acquisitions 4.11.10 Acquisition Of Surplus Property 4.11.11 Significant Emergencies 4.11.12 Selling Goods And Services 5

6. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Organization – Proposed Policy 4.11Buying And Selling Products And Services 4.11.1 Policy 4.11.2 Definitions 4.11.3 Excluded Transactions 4.11.4 Buying ProductsAnd Services 4.11.4.1 Purchasing Department Responsibilities 4.11.4.2 Supply Chain Management 4.11.4.3 Competition 4.11.4.4 Dollar Thresholds 4.11.4.5 Direct Purchases 4.11.4.6 Purchases Processed By Purchasing 4.11.4.7 Purchases Processed Through Purchasing 4.11.5 Purchases From Auxiliary Enterprises and Service Units 6

7. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Organization – Proposed Policy (continued) 4.11.6 Submitting And Reporting Purchases To The Board 4.11.6.1 Submitting For Prior Approval 4.11.6.2 Reporting 4.11.6.2.1 Report Quarterly 4.11.6.2.2 Report At Earliest Opportunity 4.11.6.2.3 Exempt From Approval Or Reporting 4.11.7 Submitting Purchases To The Board For Ratification 4.11.8 Property Control And Capitalization Of Certain Purchases, Gifts Or Other Acquisitions 4.11.9 Acquisition Of Surplus Property 4.11.10 Significant Emergencies 4.11.11 Selling Products And Services 7

8. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Why? Current Practices and Best Practices Have Outpaced Current Policy 8

9. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Current Practices • Delegation of Signature Authority • Expertise within Certain Departments • Purchases versus Payments 9

10. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Delegation Of Signature Authority • Norman Campus – 97 • Health Sciences Center (OKC) – 20 • Current Policy assumes everyone needs Purchasing’s intervention • Incomplete guidance confuses those who don’t need Purchasing’s intervention with those who do • Expertise Within Certain Departments • OU Physicians • Athletics • College of Continuing Education • Housing & Food • Research Administration • Student Union 10

11. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Purchases versus Payments • Current policy is silent; makes compliance difficult and confusing. • Certain transactions are pure payments; do not need Purchasing’s intervention. • Student refunds • Research subjects • Debt service • Acquisition or sale of real estate • OU Foundation • US Postal Service • Charities campus-wide (United Way) • Utilities campus-wide • Royalties • Insurance coverage campus-wide • Travel reimbursements 11

12. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Best Practices • Supply Chain Management • Stratification of the Supplier Base // Strategic Sourcing • Purchasing’s Role: Much More Than A Turnstile 12

13. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Supply Chain Management • Encompasses the planning and management of all activities involved in sourcing, procurement, conversion, and logistics management. It also includes coordination and collaboration with channel partners, which may be suppliers, intermediaries, service providers, or customers. It integrates supply and demand management within and across companies. • Total systems view of the links that work together efficiently. Costs are lowered by driving out unnecessary expenses, movements, and handling. Focus is on efficiency, added value, and removal of bottlenecks. Performance measurement is on total system efficiency and equitable monetary reward. 13

14. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Stratification of the Supplier Base // Strategic Sourcing 14

15. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Purchasing’s Role: Much More Than A Turnstile • Train, monitor, and collaborate with those University employees who have Signature Authority and/or Processing Authority to ensure compliance • Establish and manage strategic sourcing and other Contracts that offer Best Value • Maintain productive University-supplier relationships • Ensure that when Competition is indicated, it is appropriately carried out • Validate conditions in contraindication of Competition and administer alternative methods • Train, coordinate, and ensure that required supplier documentation (e.g. insurance endorsements and IRS forms) is properly obtained and filed • Work with University departments relative to supply/supplier support needs • Collect and analyze University data for expenditures for products and services • Define, measure, and track meaningful metrics of Purchasing operations • Collect and document information required for Board of Regents approval and reporting 15

16. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes 16

17. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Specifically assigns to University Administration overall responsibility for establishing and enforcing related controls • University Administration may further assign responsibilities to enable compliant, effective, and efficient processes and procedures • Expands “Competition” to include competitively awarded contracts from like organizations and professional associations • Allows negotiation; recognizes Competition not always possible or desired 17

18. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Language Added Specifically Addressing Supply Chain Management Principles • “As the University offers courses and degrees in Supply Chain Management (SCM), Purchasing, as well, shall use SCM principles in its execution, management, and oversight of the University’s acquisition of products and services.” • Current policy has no such language • Brings policy into 21st century • Recognizes and requires that Purchasing use judgment • Allows and requires Purchasing to operate in accordance with generally accepted purchasing principles and practices • Provides the platform for Purchasing to strengthen personnel requirements and focus on departmental outreach and collaboration 18

19. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Definitions – Language added to define certain terms • Best Value • Competition • Contract(s) • Direct Purchases • Payments • Processing Authority • Processed By Purchasing • Processed Through Purchasing • Purchases • Purchasing • Resale • Signature Authority 19

20. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Assigns labels to dollar thresholds • Makes future threshold changes easier, more efficient • “Small Dollar” - $ 5,000 • “Formal Competition” - $ 75,000 • “Approval” - $ 250,000 • “Reporting” - $ 75,000 • Two thresholds – (1) Formal Competition (2) Reporting - proposed to be increased to $75,000 from $50,000 • Recognizes the effects of inflation since the last revision • Allows Purchasing a bit more judgment with mid-range Purchases • Reporting to Board - FY13 example – would still retain 77% of dollars reported but reduce the number of transactions by 39% ($34.9MM of $45.6MM // 168 of 434, respectively) 20

21. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Signature Authority • Removes CCE as specific cite; generalizes requirements • Recognizes over 100 employees have signature authority • Assigns Purchasing oversight responsibility, requires judgment • Requires those with Signature Authority to coordinate with Purchasing (versus requiring Processing By Purchasing) • Short Fuse Air Charter Services • Assigns complete approval authority to President if above Approval Threshold and no time for Board action • Removes $300,000 limit – arbitrary and potentially unworkable • Requires reporting to Board at earliest opportunity 21

22. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Differentiates “Process By Purchasing” from “Process Through Purchasing” • “BY” requires input of a requisition, workflow to Purchasing, Purchasing must do something with it • “Through” limited to CrimsonCorner catalog purchases; also workflow to Purchasing, but released directly to supplier, no additional Purchasing action needed (unless capital asset) • Removes specific cite of Purchases up to $50,000 by Executive level officers • Not needed because of new language governing Signature Authority 22

23. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Differentiates “Payments” from “Purchases” • Assigns definition to Payments (already discussed above) and excludes them from policy • Resolves confusion over certain transactions that are processed through Accounts Payable. . . If they are above Small Dollar Threshold should they have been Processed By Purchasing? No, for Payments as defined. • Removes language alluding to “blanket orders” and “standing orders” • Technology advancements have overtaken the need for these • Relics of past practices in older systems • Outdated tools used internally by Purchasing • Not relevant policy-wise 23

24. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Definition of Contract encompasses the entire proposed term; rules out “annual” interpretation • Strengthens Board approval and reporting oversight • Current policy operates on annual spend; if less than Approval Threshold annually, prior approval by Board not required • Proposed policy based on total spend over life of Contract • Language added for clarity • Purchases above the Reporting Threshold against Purchases (Contracts) that have received prior approval by the Board are exempt from reporting requirements and from requirement for further approval 24

25. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Language added to strengthen certain exemptions from approval and reporting • “This provision may not be relied upon to devise Purchase transactions above the Reporting Threshold with the intent of circumventing the requirement to otherwise report or submit to The Board” • “Sole Source” replaced by “without Competition” • Strengthens and enlarges the pool of Purchases that must be justified in which Competition is not used • “Sole Source” is too restrictive • Recognizes technological advances and market forces that make Competition-required-by-policy pro-forma and counter-productive 25

26. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Significant Changes • Language added to address Board ratification of noncompliant purchases above the Approval Threshold • Current policy has no such language • Sets forth a sound process • Strengthens Board oversight • Selling Products and Services • Replaces the current $125,000 threshold with the Approval Threshold • Replaces “ratification” with “reporting” • Revenue contracts are reviewed by Legal Counsel and go through thorough reviews by departments and University Administration • Process to ensure Board oversight is streamlined 26

27. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Side-by-Side Comparison 27

28. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be General Policy Statement 28

29. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Definitions 29

30. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Competition Explained / Defined 30

31. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Selling Products and Services 31

32. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Cross-Referenced Spreadsheet 32

33. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Thorough Reference / Cross Reference Document on Excel Spreadsheet (C1-C68 // P1-P104). Partial example below. 33

34. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf 34

35. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Purchases From Auxiliary Enterprises & Service Units No Change University auxiliary enterprises and service units offer various products and services for sale. Examples are food services, printing services, and maintenance and repair of working spaces. Any excess of revenues over expenses generated by these entities is used to ensure future operations, renew and replace plant and equipment, and contribute back to the University’s education and research missions through Presidential priorities. When a University department purchases such products or services, the University department must allow the related auxiliary enterprise or service unit first opportunity to service the transaction. Such Purchases may be awarded to outside vendors only upon sufficient justification or upon refusal by the auxiliary enterprise or service unit. 35

36. If I Could Rewrite My Institution’s Purchasing Policies, Here’s What They’d Be Auxiliary Enterprises & Service Units 36